RBI move spurs fin service shares

Even as the Sensex dipped by 150 points, or 0.8 per cent, on Wednesday, stocks of financial services companies eyeing banking licences rose by 15 per cent as the Reserve Bank of India (RBI) rolled out a discussion paper on new bank licences.

Even as the Sensex dipped by 150 points, or 0.8 per cent, on Wednesday, stocks of financial services companies eyeing banking licences rose by 15 per cent as the Reserve Bank of India (RBI) rolled out a discussion paper on new bank licences. See graphics

Shares of Religare Enterprises and Mahindra & Mahindra Financial Services rose by 14.5 and 13.8 per cent, respectively, during the day, before softening gains to close up 4.1 per cent and 3.2 per cent, respectively.

Shares of Indiabulls Financial Services fell by 5 per cent during the day as the discussion paper said that business houses engaged in real estate activities should not be allowed to promote banks, thereby putting an end to its ambitions of entering the business.

Analysts feel no major changes have happened. "I think there is still a long time to go before the licences are awarded and as of now traders are taking short-term speculative calls on these stocks," said Alex Mathew, head of research at Geojit BNP Paribas Financial Services.

"While it would be too speculative to factor in this development in share prices, it is for the first time that the RBI is considering corporate houses for a banking license," said Vaibhav Agarwal, banking analyst with Angel Broking.